Five Stages of Process Improvement for your ERP
Jul 07 2015
Many organisations have a continuous improvement program, like “lean” manufacturing or Six Sigma, to enhance manufacturing quality and reduce costs, but there is also value to be gained from addressing continuous improvement from an overall IT systems perspective. A highly configurable ERP system can support many business process improvements, but this is seldom carried out after the initial ERP implementation.
Our 5 Stage Approach
At ComActivity, we often assist M3 sites with business improvements associated with ERP processes and recommend a five stage approach to process improvement.
Start by visualising your processes
Karen Martin, author of The Outstanding Organization, has said that “The ability to visualize non-visible work is an essential first step in gaining clarity about and consensus around how work gets done.” Mapping out business processes, whether via value stream maps or detailed process maps, is an important first step when planning to make process improvements.
Key managers and experienced users of a process should be interviewed to develop the maps and identify any known problem areas in the current process. Ideally, this will be done in the work area to get the most accurate picture of what tasks are performed. Use the questioning method of Why, What, Where, Who and When. Key Performance Indicators, Policies and Procedures that relate to that process should also be recorded.
Analyse the processes for opportunities
Analysing the processes for opportunities requires an understanding of the concept that only a fraction of business activities usually add value to the customer and the rest can be considered waste. Easy improvements can be found when we seek to eliminate the unnecessary steps in the process. Examples of waste could be activities that consume time or resources but do not add any value to the customer. Consider whether activities provide what the customer actually wants, whether they change the product or service offered to the customer, and whether they are required by law or regulatory bodies.
Evaluate solutions for the opportunities
Evaluate the different solutions available for opportunities identified during the Analyse stage. Solutions might be: i) automation of a manual task, ii) a redesign of a business process that will improve efficiency through better utilisation of ERP functionality, or even, iii) process transformation that affects how the company does business, for example by utilising industry best-practice functionality supported by the ERP system.
Measure the impact of identified solutions
Once solutions to improve business processes have been identified, they can be assigned measurements in accordance with the business benefit. According to H. James Harrington, leading adviser in performance improvement, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”
Improvements can be ranked on the basis of business benefit, impact of existing risks and the costs of implementing the change. This will support the business in deciding which improvements to implement.
Implement the process improvements
Implementation of process improvements should be approached like any other ERP change management project with Initiate, Design, Configure, Test, Deploy and Cut Over phases. It is essential that any process improvements implemented have a plan to evaluate the effectiveness of the change after Go Live.
An ERP system has the capability to transform how people work in an organisation well beyond the initial implementation. The above five stages of process improvement can support a continuous improvement initiative that will help get the maximum value out of your ERP investment and deliver bottom line value to your business.